ANWR lease flop offers Alaska a dose of harsh energy reality

The horrific events at the U.S. Capitol this last week demonstrate that reality can be harsh, dispiriting, and disruptive when it sets in on those who’ve been living in an alternative world of election results. Although far less disruptive, Alaska saw the same downside of reality playing out when the oil and gas lease bids were opened for exploration in the Arctic National Wildlife Refuge.

Three years ago, President Donald Trump proclaimed that opening the Arctic Refuge would lead to America’s energy dominance. The entire Alaska congressional delegation jumped on the President’s bandwagon, declaring that Arctic Oil will be the next economic savior for Alaska’s economy. The “glory days” of big oil were about to return, according to these political leaders.

I challenged this assertion in an ADN column in 2018. I wrote, “There are five countries, including China and India, looking to ban the internal combustion engine by 2025, 2030 or 2040. What the Chinese did to fuel the boom in photovoltaics, they now want to do with electric vehicles. More than 40 countries place a price on carbon. As demonstrated by China, Germany, France and the other 192 signers of the Paris Climate Agreement, the path to energy dominance lies with the clean energy economy and away from fossil fuels.”

Three years later, the global economy in response to the climate crisis has shifted even further away from fossil fuels. Here in Alaska, we see this playing out in BP’s recent exit from Alaska as they choose to invest significantly more in wind and solar. While BP is able to see the climate handwriting on the wall and switch directions, the state of Alaska remains blind.

Although the verdict is still out as to whether or not the Paris Agreement will be enough, the world has nonetheless accepted the challenge to keep global warming to two degrees or fewer. In this light, the University College of London in 2015 sought to figure out how much fossil fuels could be possibly burned before hitting the two-degree threshold of warming. Turns out only two-thirds of known oil reserves in the world can be burned. The rest needs to stay in the ground. The researchers concluded that “we shouldn’t waste a lot of money trying to find fossil fuels which we think are going to be more expensive. That almost certainly includes Arctic resources.” This conclusion was borne out by other financial assessments and is the primary reason that large financial institutions have now ceased to finance oil development in the Arctic. It’s not just about succumbing to pressure from conservation organizations, it’s about economic reality in a rapidly changing world.

Sometimes the world changes in leaps when economic barriers are broken. For several years now, solar and wind power have reached “grid parity” (meaning utilities can source electricity as cheaply with those forms of energy as others) with coal and natural gas throughout the U.S. and the world. Crossing over to grid parity is like water becoming ice; a difference of one-degree that results in transformative change. This is what is occurring for renewable energy and the growing electrification of the transport sector.

Just last month, 42 leading U.S. CEO’s from companies like Ford Motor, JPMorgan Chase, Walmart and Amazon signed on to a statement recognizing that climate action is a “business imperative.”

This is today’s climate and energy reality that the state of Alaska fails to recognize out of allegiance to the oil and gas industry. I understand how the 40-year effort to open ANWR has colored Alaska’s perception of viable projects, but to have the state of Alaska step in the role of the private sector is clearly a move of desperation.

With a drum roll of rushed procedures, the Bureau of Land Management opened the bids to, at long last, explore and develop within the Arctic Refuge. Ta-da! No major or mid-size oil company showed up at all. Instead, the bid total was $14 million, most of which came from a state agency that has no track record in oil development. For context, it’s important to recall that ANWR got added on to Trump’s tax bill as a way to offset tax cuts to the tune of $1.8 billion. “It was, in oil industry terms, a dry hole. A bust,” said oil and gas analyst, Larry Persily.

In other words, the harsh reality of a world rapidly shifting away from fossil fuels just came crashing in. Unlike the awakening caused by the election, no one died in this reality-imposing event, no offices got mobbed, no desecration of democracy occurred. We can learn from this bust and move on to joining the rest of the world in embracing the clean energy economy.

Ahmed Zaki Yamani, the Minister of Oil for Saudi Arabia for more than 20 years, said, “the Stone Age didn’t end for lack of stones, and the oil age will end long before the world runs out of oil.” He said this long before the urgency of the climate crisis was front and center.

Kate Troll, a longtime Alaskan, has more than 22 years experience in coastal management, fisheries and energy policy and is a former executive director for United Fishermen of Alaska and the Alaska Conservation Voters. She’s been elected to local office twice, written two books and resides in Douglas.

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